The Southern European countries have been Vodafone’s weak spot for some time as customers there have dramatically cut their mobile phone usage. However, the situation worsened in recent months and is spreading to other territories including Germany and Britain. Analysts called the trends “a bit of a shocker”.

Service revenues from calls, texts and internet usage slumped 18.1pc across Southern Europe, led by a 19.3pc drop in Spain and a decline of 18.4pc in Italy. Vittorio Colao, chief executive, said that two businesses were “not bad assets [but ones] that are in challenged countries”, where economic weakness and unemployment have hit consumer confidence.

Companies are slashing costs, whilst consumers are “hopping from one promotion to another” and using of free alternatives to calls, such as Skype.

Southern Europe was not the only region to suffer. The UK, which Mr Colao likened to a “good bottle of wine” just a few months ago because of its reliable performance, saw a 2.1pc drop in service revenues as customers cut their phone bills. Germany managed to increase revenues, but growth slowed to 1.8pc from 4.2pc last year. Earnings before tax, interest and depreciation fell by 11.7pc.

Analysts were downbeat about the performance, and the shares fell 4.1 to 162½p. Will Draper at Espirito Santo said the numbers were “tougher than expected”.

The picture was not entirely bleak, however. Turkey saw revenue surge 18pc, while Ghana and India saw income from texts, calls and internet usage jump by 17.4pc and 11pc respectively.

“Emerging markets now account for around a third of revenues. They are very important,” Mr Colao said.

Vodafone was also buoyed by its 45pc stake in Verizon Wireless, the US mobile giant, which on Monday said it would pay an $8.5bn (£5.4bn) dividend by the end of the year. The windfall will be Verizon Wireless’ second dividend payment in 2012, after a hiatus of several years.

Analysts have raised fears that Vodafone is over-reliant on the US business, but Mr Colao batted away their concerns: “It’s a great asset. It’s a very comfortable thing that we remain linked to them.”

He added he is “very positive about the longer-term opportunities” for Vodafone, especially the growth in internet usage over mobile handsets. Nearly a third of Vodafone’s European customers now use smartphones and the group receives almost two thirds of its income from internet usage, up from 56pc two years ago. The falling cost of smartphones means that in five years, “all phones will be smart, 100pc,” Mr Colao said.

Vodafone predicts that operating profit over the full year will be towards the top end of the previous estimate of £11.1bn to £11.9bn.